“In the past year, YouTube’s streams have gone up from 100M to 300M daily streams… but market share has gone from 52% to 27%.”
Dabble CEO Mary Hodder.
YouTube’s total market share is actually larger than 27% though if you consider comScore, etc., so I’ll look into this, something is off.
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WatchMojo NewsletterFortune’s Michael Copeland, whom I grew up reading, was the moderator of the next panel, on obtaining funding as a content creator, be it video or games, etc. The panel included:
Copeland asks: why will this time be different?
Dennis Miller, Spark Capital: In the late 1990s, Hollywood wanted to work with Silicon Valley because the Valley was making more money and VCs wanted to be movie stars. Times have changed… but indeed, most VCs should not touch content or Hollywood… but broadband is much higher. There is froth but expectations are very different, more sober.
We’re in very early days of web creation. When cable started off, content there was bad, look at it now. Same thing is happening online. Social media is the it girl and VCs are followers.
George Zachary, Charles River Ventures: “Movie making business is not a good business for investors, because talent extracts money. Money is in distribution or the conglomerate. You never see an 1,000x return business, there are no Google or YouTube returns. It’s an OPM business, or Other People’s Money. It doesn’t happen. We invest in digital media as middleware. The real money is in social networks that own users and allow people to interact and consume media.”
Mike Hirshland, Polaris Venture Partners: “Investing in content plays where the founders have experience. Heavy.com and JibJab are both companies who struggled through the last cycle and had in process figured a model. Over time, they built a brand and gained distribution. Both have been around for a few years.
We looked at a few traits, common in both:
a) both have seen success in distribution, JibJab had a few isolated wildly successful clips while Heavy.com had 5-6M uniques;
b) the team: the lessons and perseverance of sticking through thin times won us over. That gave us confidence.
c) brand: the guys had a brand not just with users but with marketers.
Today you can create popular entertainment for inexpensive total costs. If you simultaneously have an audience that scales, say 5-20M uniques, and have the ability to match it with marketers, then it can be very profitable. But to make it work, you need to have scale. Some companies have scale, most don’t. But a small size of content companies will make a lot of money.”
Tim Haley, Redpoint Ventures: “Do you invest in companies who produce content vs. making money off of content. Digital media in social network sites, for example, shifts the model of taking the old media model (hire editors and pay them to create content). Production studios remain a hits business, it’s a hard business. Social media sites leverage the content as catalyst.
We make content-centric investments, such as MySpace, or BuzzNet, but they are not content producing sites per se.”
Does FunnyorDie make sense?, asks Copeland: “The die part does,” says Miller. “There is already roadkill, there will be massive roadkill… the froth is back, because there is a lack of managers and good ideas relative to the money available. Private Equity has put $5B in the film industry and they will see that be its worst industry, Providence put $5B in MGM and they don’t understand movies, so they will be taken [for a ride] there.”
I’ll add some commentary on this one soon…
The next panel sought to answer the question: Is there money in Long Tail Video?” or mainly: how do you make money. The panel was moderated by Jeremy Liew, from Lightspeed Venture Partners.
“There’s 150 people in this room who believe there is money in video, so let’s ask how do you make it,” starts Liew.
Matt Sanchez, VideoEgg: “We’ve seeing pre-roll, or mid- and post-roll because that is close to TV ads, but those work with long form content. We have taken the market with an invitation overlay, it’s user controlled and that is something that can be demanded, even if done in conjunction with rolls. Pre-rolls are disruptive and deflate volume of streams, you are seeing more and more adoption of overlays.” The company supports 4 units, with overlays being the key.
Matt Wasserlauf, Broadband Enterprises: “30 second spots is a lot to ask the online viewer, and advertisers are making changes. The pre-roll is the anchor, all other ad units feed off the pre-roll. Repurposed 30-second TV ads get tired, in 2008 you will see a lot of great short form pre-roll creative, optimized for the Web, let’s hold judgment and see what comes of pre-roll ads.
Tod Sacerdoti, BrightRoll: “BR is agnostic to any one unit, we aggregate audiences and then resell it to marketers, it could be in any format. What you see mainly is branded content and branded advertising. But despite what is said about pre-rolls, pre-rolls is the most effective units. A lot of progress on standardization of hosting and serving and tracking of video ads, you see this with banner ads, why not video ads?” BR’s majority is pre and mid-roll ads, and the company supports 5 ad units.
Jayant Kadambi, YuMe: “The most successful ad format has a lot to do with the contextual relevance of ads to the content, and not really the format. We work with ad agencies and support any new idea agencies have to promote the idea. The bulk of our business remains pre-roll type of ad units.”
Everyone agrees that the lack of cross-site, cross-platform measurement services hurt the draw of online video. There are players like Tubemogul, Hey Spread, Vidmetrix and even Veoh who have started to address these, but despite the pros of each player there, those services remain very limited (they only work with some of the online file sharing sites, for example, and not the major portals like MSN video, AOL, Yahoo! etc.)
Related:
- Why Video Egg is hinting at suing Google over the overlay?
- Brightcove vs. Brightroll vs. Yume vs. Scancout etc.
- Will video become larger than paid search?
- Has the bubble in file sharing video platforms moved to ad networks?
The first panel was moderated by Gregg Spiridellis of JibJab (hopefully he’s “get a mention on New Tee Vee next time JibJab issues a press release for his time”) and offered a round table including:
Spiridellis touched on a wide number of issues: measures of success, choice of content, separation of web/TV content strategy and creation,
Lisa Donovan, creator of Lisa Nova, referred to seeing the initial bursts of streams, at first catching you off guard then it becomes normal. Ultimately, having a deal done with Mad TV with no representation showed the power of the medium.
Douglas Cheney, Big Fantastic reflected on their first meeting with Tournante - Michael Eisner’s investment vehicle - and figuring that Eisner might not actually show up to the initial meetings… but he did. Getting Eisner on board validated what they were doing.
Ty Ahmad-Taylor, MTV addressed the challenge for a major content creator offline to identify assets for online. The company looks at Omniture stats, target market studies, but - surprisingly, unlike what Salmi was suggesting in the first Q&A of the day - MTV does go to where their audience is, namely Facebook and MySpace to test things out and then it might reinforce those efforts on their own site. Definitely get a sense that MTV runs a Procter & Gamble-esque shop where they emphasize a lot of data, figures etc., to make decision. That’s not a bad thing at all… “We cannot be gatekeepers to our content all the time”, he concludes: “it’s important for us to be where our customers are”. There are four kinds of customers online: “People who never come to your site, once a week, once a month and those who come every day… and most of our clients fall on the third category - people who come once a month - so there is no need to have a big storefront.”
Wow. Interesting indeed. Ty is very candid with regards to the challenges facing big media: “if you don’t let users take the content, you’re telling them steal it”.
Gary Wang, Tudou: Tudou is widely seen as China’s version of YouTube. Age is the line in the sand when it comes to how much awareness online video has: younger generations are online and consumer video online, older generations (above 30) less so, but catching up. Tudou - unlike others in the panel - is mainly a UGC site and one that offers users copyright content. As such, it sits on the opposing site of the table than most of the others in the panel, but there is one main nuance, explains Wang: “in China, the media companies are not major players, they are scattered and small companies, so it makes our lives easier because Asian content creators are smaller, more open-minded, there is no syndication business, DVD sales are non existent… so when we come in and say ‘we’re an online distribution company and offer a revenue share program’, they are more open-minded.”
Kevin Cohen, Turner Broadcasting System: the company initially invested a lot in infrastructure and is now reaching out via partnerships for content, not just taking TV content and repurposing it. Super Deluxe allows the low cost launch of a network without having to write a billion dollar check. There are no barriers in online space, so we launched Super Deluxe, going after a lot of the talent in Hollywood writing comedy. There is quite a bit of concern over piracy, “25,000 clips are posted to YouTube each day. This has an effect on traffic.” But on the news site, the company is embracing UGC…
It’s easy to knock AT&T as a large, slow corporation, but listening to De La Vega and seeing some of the things coming out of AT&T Labs, you’d almost think, “by golly, AT&T gets it!”
If AT&T accomplishes ever a portion of what it’s setting out to do, IPTV can be a very important piece of the puzzle.
IPTV sets out to expand choice of content to consumers - from both established players and niche creators - to really become on demand.
Like YouTube’s brass, De La Vega sees torso content - the content between UGC and studios/network content - as the major opportunity online. But due to licensing challenges, they also see this as the main problem to overcome, before it becomes the next billion dollar business. I totally agree here, being a producer of torso content ourselves.
Alas, the company is looking to offer its 120M consumers content across all platforms: web, TV, mobile; and needs licensing deals to cover rights across these platforms.
He also stressed, however, that content needs to be high def and high quality, “UGC does not cut it” was the main theme.
AT&T, and all telcos in fact, are slow and deep-layered, but listening to De la Vega – a Cuban native – it sounds like AT&T is looking for partnerships, particularly with content owners: “new TV is not something we can do all alone.”
“We call it the new AT&T, or AT&T 2.0.” which naturally got some chuckles from the audience, yeah, I’d drop that that last part.
Of note for AT&T consumers, expect expanding 3G coverage by next year, in 2008.
More to come.
Viacom’s Mika Salmi runs MTV Networks, he was acq-hired in the $200M Atom Entertainment acquisition. He has a penchant for animated content, naturally, but he does have a great vantage point in what Viacom is up to in terms of creation and distribution online.
The company does like to create a lot of communities around their content on their own sites. They partner with many third party sites, too, but you get a sense that those are secondary to Viacom’s own sites.
The elephant in the room remains YouTube, whom Salmi’s boss Sumner Redstone is suing. Salmi clarifies that the company is open to YouTube deal, but it’s not a commercial relationship in the sense that YouTube did not have a clear financial proposition to make, and that it was mainly speculative. Yes, this is my extrapolation of what was said…
Like News Corp.’s Fox Interactive Media, Viacom’s digital revenues will come in at the $500M range in 2007, trailing News Corp., but “not my much”. See who is king of digital media here, for a more complete rundown.
Salmi seemed to think that we will have to soon see the outcome of the line between TV and Web become less blurry: “will there be Wifi, or a CPU in TV?”
When asked if the writers’ strike will become a tipping point, Salmi is quick to say no, but does suggest that the web is a sandbox for potential TV ideas.
More to come.
Giga Om’s New Tee Vee Conference kicked off this morning with Om Malik announcing that his company closed a Series B round of financing.
Like other conferences I’ve attended, such as Paid Content’s Economics of Social Media, Tech Crunch 40 or Paid Content’s Future of Business Media, I’ll be blogging throughout the day, but afterwards, I’ll also have a overview, 10 challenges facing online video, based on tidbits of all the panels, speakers, etc.
Bear in mind that everything you read is coming from the biased perspective: our company’s core competency is the production, publishing and syndication of original web video for the web, on wireless and in out of home digital networks. For what it’s worth, we pretty much partner - be it directly or indirectly - with every single company attending and speaking here…
First interview, with Mika Salmi, here.
Second interview, Ralph De La Vega, here.
Panel: Crossover Hits, here.
Panel: Video Advertising, here.
PLAY
